The U.S. government is receiving flak from health experts after news of stocking up on Gilead Sciences’ GILD coronavirus drug, remdesivir, for the next three months.
Earlier this week, the Department of Health and Human Services (HHS) announced an agreement to secure large supplies of the drug for the United States from Gilead through September. The agreement will allow American hospitals to purchase the drug in amounts allocated by HHS and state health departments.
HHS has secured more than 500,000 treatment courses of the drug for American hospitals through September. This represents 100% of Gilead’s projected production for July (94,200 treatment courses), 90% of production in August (174,900 treatment courses) and 90% of production in September (232,800 treatment courses), in addition to an allocation for clinical studies.
The health experts are worried that there might be a shortage elsewhere in the world if the United States stocks up the supply of three months.
Currently, there are no FDA-approved treatments for the severe illness caused by SARS-CoV-2. The pharma/biotech sector is running a race against time to come up with treatments and vaccines to cure the contagion.
Given the alarming levels of spread and severity, some approved drugs/pipeline candidates are being tested to see if they are effective in treating infected patients.
Among these, remdesivir has shown the maximum promise. The FDA granted remdesivir an Emergency Use Authorization for the treatment of hospitalized patients with severe COVID-19, given the severity of the pandemic. It was granted regulatory approval in Japan under an exceptional approval pathway. Remdesivir has recently been recommended for approval by the European Medicines Agency (EMA)’s human medicines committee (CHMP).
Gilead had earlier donated the drug to many countries in need. However, the company recently announced the pricing of the drug. The company set a price for governments of developed countries at $390 per vial, which equates to $2,340 per patient as the vast majority of patients are expected to receive a five-day treatment course using six vials of remdesivir. For the developing countries, Gilead has entered into agreements with generic manufacturers to deliver treatment at a substantially lower cost.
With the contagion affecting the United States the worst, it is unlikely for Gilead to have any surplus supplies of the drug.
Gilead’s shares have rallied 19.3% in the year so far compared with the industry’s growth of 13.3%. In fact, remdesivir is pioneering the race for a possible treatment of this deadly virus.
While a potential approval of remdesivir will be a significant boost, there is uncertainty regarding the drug’s profitability in the long run, particularly after vaccines hit the market.
We note that AstraZeneca AZN collaborated with the University of Oxford for the latter’s recombinant adenovirus vaccine, formerly known as ChAdOx1 nCoV-19, and now, AZD1222.
Meanwhile, Roche RHHBY too initiated a late-stage study on its arthritis drug, Actemra/RoActemra, in combination with remdesivir in hospitalized patients with severe COVID-19 pneumonia. Alexion ALXN is also evaluating its rare disease drug, Ultomiris (ravulizumab-cwvz), for the COVID-19 infection.
The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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